Basket

AAA

DEFINITION of 'Basket'

A single unit of at least 15 stocks that are used in program trading. Baskets are traded on both the NYSE and the CBOE for institutions and index arbitrageurs. Both instruments allow for the composite purchase of all of the stocks in the S&P 500 in a single trade. Baskets were created after the stock market crash in 1987 to better facilitate institutional trading on the index.

INVESTOPEDIA EXPLAINS 'Basket'

Basket was also the nickname given to a specific type of financial instrument that briefly traded on the Philadelphia Stock Exchange in 1989. This security was removed from trading due to regulatory controversy over its nature. The baskets that traded on the other two exchanges eventually also ceased trading due to poor volume.

RELATED TERMS
  1. Derivative

    A security whose price is dependent upon or derived from one ...
  2. Security

    A financial instrument that represents: an ownership position ...
  3. Chicago Board Options Exchange ...

    Founded in 1973, the CBOE is an exchange that focuses on options ...
  4. Credit Derivative

    Privately held negotiable bilateral contracts that allow users ...
  5. New York Stock Exchange - NYSE

    A stock exchange based in New York City, which is considered ...
  6. Market Value

    The price an asset would fetch in the marketplace. Market value ...
Related Articles
  1. Options & Futures

    How do I use a "basket" option?

    A basket option is an option with an underlying asset "basket" of securities, currencies or commodities. Basket options are a popular way to hedge portfolio risk. Meanwhile, using the basket ...
  2. Fundamental Analysis

    What is the difference between market capitalization and equity?

    Understand the difference between market capitalization and equity, two primary measurements used to evaluate the worth of a company.
  3. Fundamental Analysis

    What is the first day of the first quarter?

    The first day of companies' fiscal years varies based on industry cycles. The timing is especially important because annual reports can have unexpected effects.
  4. Trading Strategies

    How do I use the dividend capture strategy?

    Learn how to implement the dividend capture strategy, an aggressive, income-focused stock trading strategy investors can use to increase equity profits.
  5. What's a Marketable Security?
    Active Trading

    What's a Marketable Security?

    Marketable securities are financial instruments that can be readily bought and sold in a public market. The key feature is the ease with which it can be sold and converted into cash. Usually, ...
  6. Chart Advisor

    Cocoa Prices Setting Up For A Move Lower

    Cocoa prices have been trending lower over the past several months and the recent bearish crossover between the 50-day and 200-day moving averages suggest that the long-term downtrend is gaining ...
  7. VelocityShares 3x Long Crude Oil ETN has the potential for huge returns, but there are several reasons why you might want to steer clear for now.
    Mutual Funds & ETFs

    A Leveraged Oil ETN For The Future (Just Not Now)

    VelocityShares 3x Long Crude Oil ETN has the potential for huge returns, but there are several reasons why you might want to steer clear for now.
  8. Stock Analysis

    Buyinb Facebook Stock, A Beginner's Guide

    This straightforward guide helps the novice investor feel more adept at buying a stock, such as Facebook (FB).
  9. Chart Advisor

    Commodities Set Up For A Continued Move Lower

    Commodities have been suffering since late summer, and unfortunately for the bulls it doesn’t appear that the situation is about to change anytime soon.
  10. Trading Strategies

    How do technical analysts interpret the Average Directional Index (ADI)?

    Learn what the average directional index is and why technical analysts look towards ADX indicators to measure the strength of price trends.

You May Also Like

Hot Definitions
  1. Christmas Club

    A short-term savings account that usually pays out the full account balance to its account holders once each year, right ...
  2. Boston Snow Indicator

    A market theory that states that a white Christmas in Boston will result in rising stock prices for the following year. For ...
  3. Christmas Island Dollar

    The former currency of Christmas Island, an Australian island in the Indian Ocean that was discovered on December 25, 1643. ...
  4. Santa Claus Rally

    A surge in the price of stocks that often occurs in the week between Christmas and New Year's Day. There are numerous explanations ...
  5. Commodity

    1. A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often ...
  6. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
Trading Center